Failure on reforms like GST, land law could hit investment: Moody’s

New Delhi, Nov 25 (IANS) Moody’s Investors Service on Wednesday said the failure to implement reforms by passing the GST and land bills in parliament could potentially hurt investments amid weak global growth and prove to be a “downside factor” for Indian companies.

“It seems highly unlikely that the major reforms will get enacted by the upper house of the Indian parliament where the ruling coalition is in minority. A failure to implement these reforms could hamper investment amid weak global growth,” Moody’s vice president Vikas Halan said in a report.

“The government is unlikely to win a majority in the upper house if it keeps losing state elections like it did recently in Delhi and Bihar. Opposition parties are unlikely to allow key reforms to go through,” he added.

The constitution amendment bill for Goods and Services Tax (GST) has been passed by Lok Sabha, and is pending in the Rajya Sabha, where the ruling NDA does not have majority.

Minister of State for Finance Jayant Sinha told reporters here on Monday that the government is making efforts to convince the opposition about the GST bill.

“We are trying to talk with them (opposition) about all the aspects of GST. We all recognise how important this is for the economy so we are in continuous discussion to see what we can do to get it passed in the winter session,” he said.

The American agency cautioned that continued weak global growth and the prospect of the US Federal Reserve raising interest rates may also have an impact on Indian companies.

“The corporates remain vulnerable to the volatile Indian rupee as against the US dollar and to low commodity prices, which has in turn led to a sharp decline in external trade,” Halan said.

“The fall in commodity prices has benefited many Indian corporates given the country’s status as a net importer of raw materials and its recent history of high inflation. But low commodity prices will result in deterioration of credit metrics of metals and mining companies,” he added.